Link Brokers Can Rule the Internet

by on September 28, 2010 | posted in SEO Theory

How can SEO Agencies scale? Seemingly, the act is impossible – you have one of two plights that mean your eventual downfall when broaching a certain point of growth.

If you take the white hat route like SEOMoz, you are forced to allocate much of your cost to salary and recruiting, which means the imminent risk and difficulty of hiring SEOs talented enough to consistently bring in links that make websites rank, and therefore validate their high consulting fees. At some point it becomes impossible to impart the expertise and knowledge of the top tier SEOs at the top of the company, like Rand, to the grunt-work interns putting in the sweat and tears. The further and further detached the breadwinners come from the grunts, the more the company becomes an Indian call center with a watered-down service package – one that causes white-hat agencies like SEOMoz or High Rankings to either jump ship or publicly complain about the Google web spam team.

If you choose the black/gray hat approach – as most agencies do – your biggest costs aren’t employees – they’re link acquisition fees. When going gray, your employees can handle many more client accounts, but, to do so, much of their outreach must be done through link brokers – reducing link acquisition time and purchasing cycles, allowing you to scale client size without needing to hire countless interns who can’t tell a hyperlink from a hot dog. The problem, here, is that you are at the whim of the brokers – they assimilate much of the margins, making it difficult to make real, massive profits off of your efforts.

If you decide to go direct to the websites, turnaround is slow, and the cost is higher  – because they are no longer forced to mark down for the car dealerships – the link brokers. You spend more time acquiring the link, too, increasing labor costs and again, making it increasingly difficult to scale.

The Link Brokers Data Bed

Aaron Wall released a post in May detailing that gray-hat SEOs should possibly fear the knowledge link brokers have of their spending budgets – as said brokers have access to what kind of money you’re putting to work, keywords, and basically, all the data a business needs to determine profitability. I don’t necessarily agree that we should fear a link broker’s data knowledge – any and every business should be diversifying where they acquire links, whether or not they’re gray or white – so it should be rather indeterminable the exact cost associated with your niche.

And, there’s the case for ideas being a multipler of execution – for any medium sized business, it may be worthwhile and determinable by a link broker that a vertical could be particularly profitable, but many still won’t have the resources, time or ability to put together the capital and execute on it to compete against you.

But, despite this point, there’s an overarching element from Wall’s piece that partially inspired this post – the inherent advantage link brokers have over all of SEO – one they may or may not be taking advantage of – but one they should be.

We Can’t Compete Against Link Brokers

Imagine a beginning stage media company, one with the intention of eventually selling SEO services, and/or building out their own properties. If they truly had the desire to build out a media company that would scale, they’d first invest a sunk cost in building out a website that would become a reputable link broker. By becoming a service that brought bloggers to them, they’d not only get the income from the text link sales, they’d also be able to build out large properties and sell SEO services at immense, indomitable margins, because they’d be buying links at the minimum viable cost to the blogger – not at the mark-up that all SEO companies are forced to deal with currently.

They would be able to provide the same results to SEO companies and get the same link juice passed – at a fraction of the cost. Whether they were competing against white-hat patriots or black-hat demons, they would be impossible to compete against – because they would have the platform to purchase links at bottom dollar fees.

They would be the car dealership purchasing used cars from customers that came direct to them – while every competitor would be the ones buying cars at markup price, right from the dealership. For websites in similar niches with similar offerings, this competitive advantage would be impossible to overcome.

The Big Brother of SEO Companies

If I had the cash to throw down as a VC, I’d be ringing these brokers off the hook with this pitch, and/or scrambling to find ways to build this out myself. The only qualm I see with it is privatization – if a current, large media company publicly acquired a service like Blogvertise or Sponsored Reviews, it would be fairly obvious what they were doing, and Google would be forced to take action.

However, if a fresh company did it more silently, and only built out mid-tier websites, it could be done effectively with a well orchestrated waving of NDAs and well-trusted closed lips. Also, a VC could invest directly in established brokers, using their resources to fill it out with talented developers to scale the construction of multiple websites to rule the SERPs – and/or sell SEO services at huge margins. And they wouldn’t even have to work unethically and steal the data of the people who buy links from them – because they really wouldn’t even need to.

It’s likely that this is already occurring at some scale – but I imagine, and feel, that it is not nearly occurring at the scale it could be. But who’s to say? It can be pretty difficult to care when a single company  is kicking your ass in the SERPs – because you can still do pretty well despite them.

Of course, if you’re naive, you might be of the belief that at some point, paid links will pass no value, and this investment would be for naught. If you really believe that, I say, read up on disruptive links, and also, go home – you’re playing in the wrong sandbox.

  • http://www.canuckseo.com Jim Rudnick

    Ummmm…..lots here to ponder, Ross….I’m up here in Canada and while we’re no where near ground zero for any of these link buying firm tactics, I still see them occasionaly….and I’m not even counting the daily INBOX emails from offshores looking for link buys….

    Hmm…..gotta think on this…but thanks!

    :-)

    Jim

    • http://www.rosshudgens.com Ross Hudgens

      Jim, if you’re on Planet Earth and you use the internet, you’re near ground zero for the link buying firm tactics. ;) I have no idea where these firms are physically located, but their data is everywhere on the internet, so it’s definitely something to be concerned about.

  • http://www.rlmseo.com John Crenshaw

    I was under the impression all these link brokers require publishers no-follow any links brokered through them? Of course, publishers can always ignore this, but why would they when they can follow Google’s guidelines and get paid the same amount?

    Am I wrong on this or are some brokers encouraging do-follow links?

    • Ross Hudgens

      John, bloggers are generally not very technical – and also, brokers do not always explicitly state that you have to no-follow. In fact, some straight out declare on their homepage that getting links with them will increase your search engine rankings.

  • http://ericpratum.com Eric Pratum

    Finally, a reason to really get Eric Media going!

    In all seriousness though, I imagine there could be some sort of anti-trust issues with this at scale, but then again, I’m not an expert in that either, so who am I to say. Nonetheless, this is a very intriguing idea, but I feel like this would require an upfront investment that would be too daunting for many people…a large enough investment that they would truly question whether they could get their money out of it in the end. Who knows though. I’m no expert, so I’ll continue to follow your lead on things like this.

    • Ross Hudgens

      This isn’t a person to person thing – so it shouldn’t be imagined as something you or I could do. It’s something that requires network and leverage and lots of assets and all that – but I think, since companies like eHow are very willing to invest lots of VC money into an SEO play, I think it could very easily happen.

      Since posting this I have already had someone e-mail me citing such a network of websites operating at low costs (by someone identified as connected to these brokers) – so it definitely exists.

      • http://ericpratum.com Eric Pratum

        I guess that I meant more of VCs or Angels when I said “many people.” I used to work in Angel investing, and I know that a case can be made for anything as a good investment, but I was envisioning that it would be too difficult to make the case for something like this. I could be wrong though. You do make a good point about sites like eHow. That was one large point of your blog post that I mistakenly overlooked. If the site network is in place, putting the SEO into play would seem much less risky.

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